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EXHIBIT 99(3)
May __, 1999
Dear Option Holder of XEON Financial Corp.
As you may be aware, XEON Financial Corp. ("XEON") and First Security
Corporation ("First Security") have agreed to merge XEON with and into First
Security, subject to certain conditions, including the approval of XXXX's
stockholders. You are currently a holder of an outstanding option or options to
purchase ________ shares of XEON stock issued under the stock option plan of
XEON (the "Plan"). With this letter you have also received a copy of the
combined First Security prospectus and XEON Proxy Statement related to the
merger. XEON and First Security are sending you this Prospectus/Proxy Statement
to provide you with important information about this proposed transaction.
First Security and XEON have agreed in the merger agreement to provide a
method for the "cashless exercise" of your option, such that you will not have
to pay the exercise price in cash. If you agree to this procedure, immediately
prior to closing you will be deemed to have received a number of XEON shares of
common stock with a value equal to (a) the difference between the per share
value of the XEON common stock as calculated pursuant to the merger agreement
and the option exercise price, (b) multiplied by the number of shares obtainable
upon the exercise of the option. This number of XEON shares deemed to have been
obtained will then be converted into shares of First Security common stock at
the conversion ratio provided in the merger agreement. Because the value of the
XEON stock and the exchange ratio to be used in the conversion of your stock
depend upon stock prices for periods immediately prior to the closing, we are
unable to provide you with that information. Immediately following the closing
of the merger, First Security will send you a transmittal letter, outlining the
steps you should follow to obtain First Security stock. That letter will provide
you with all of the financial information related to the conversion of your
option.
We believe that there are three alternatives you could elect in regards
to your option(s):
FIRST: The first alternative is to do nothing and let the option(s)
expire. If you select this alternative, you will receive nothing
for your option(s) and your unexercised, in-the-money option(s)
will become worthless from and after the merger closing date.
SECOND: The second alternative is to exercise your option and pay XEON
the exercise price, receive your shares of XEON stock and either
have the XEON stock converted into First Security stock or
exercise your statutory dissenters' rights. This alternative
will require you to come up with the exercise price in cash now.
THIRD: The third alternative is to elect the cashless exercise
procedure proposed above.
We advise you that this cashless exercise program will have tax
consequences to you. XXXX and First Security urge you to consult your tax
advisor as to particular facts and circumstances which may be unique to you and
also any tax consequences as a result of the exercise of your options.
Because the option is a personal right to you, you must affirmatively
agree to elect the cashless exercise procedure set forth above. Please indicate
below if you are willing to elect the cashless exercise program and return a
copy of this letter to XEON Financial Corp., 000 Xxxxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxx 00000, Attention: Xxxx X. Xxxxxx, Xx. If you have any questions about
your option or the "cashless exercise" procedure set forth above, please feel
free to contact me.
Sincerely,
XEON FINANCIAL CORP.
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XXXX X. XXXXXX, XX.
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I am the holder of option(s) to purchase _______ shares of the common
stock of XEON Financial Corp. issued to me pursuant to the Plan. I hereby agree
to accept the terms of the cashless exercise procedure discussed above, pursuant
to which my option(s) will be deemed to be converted into shares of XEON
Financial Corp. common stock as provided above and then converted into shares of
First Security common stock. I understand these conversions will only occur at
the closing of the merger between XEON and First Security and, if for some
reason the merger does not close, my option(s) will be unaffected. If the merger
does close, all of my rights under the option(s) will terminate and I shall only
be entitled to receive the shares of First Security common stock as provided
herein.
DATED: ___________, 1999 ____________________________________________
Signature of Option Holder
____________________________________________
____________________________________________
____________________________________________
____________________________________________
Printed name and address of Option Holder
FIRST SECURITY CORPORATION
hereby acknowledges that it has received
an executed copy of this letter from XEON
FINANCIAL CORP. to the above-
referenced Option Holder as of _____ day
of ____________, 1999.
FIRST SECURITY CORPORATION
By:_________________________________
Its:___________________________
